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Short Tesla? Try CRSH for a Huge Yield Instead. | The Motley Fool
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Published in Stocks and Investing on Friday, July 25th 2025 at 21:14 GMT by The Motley Fool🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
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Why Shorting Tesla Directly Is Risky – And Why CRSH Offers an "Insane" Yield Alternative
In the ever-volatile world of electric vehicle stocks, Tesla Inc. (TSLA) continues to dominate headlines and investor portfolios alike. As one of the most polarizing companies in the market, Tesla has seen its share price swing wildly, driven by factors ranging from CEO Elon Musk's tweets to production milestones and regulatory hurdles. For bearish investors who believe Tesla's valuation is overinflated or that headwinds like increased competition from legacy automakers and supply chain issues could drag it down, the temptation to short the stock is strong. However, a recent analysis from Motley Fool highlights a compelling alternative: instead of directly shorting Tesla, consider the CRSH ETF, which promises what the article dubs an "insane" yield while mitigating some of the inherent risks of traditional short-selling.
The article begins by dissecting the perils of shorting Tesla outright. Short-selling involves borrowing shares and selling them with the hope of buying them back at a lower price to pocket the difference. But Tesla's history is riddled with short squeezes – dramatic price surges that force short-sellers to cover their positions at a loss, often exacerbating the upward momentum. The most infamous example came in 2020 when Tesla's stock skyrocketed, wiping out billions in short positions and earning Musk the moniker of "short-seller killer." The piece points out that even in 2024, with Tesla facing challenges like slowing EV demand and margin pressures from price cuts, the stock remains a favorite among retail investors and has a cult-like following. This makes it prone to unpredictable rallies, potentially leading to unlimited losses for shorts, as there's no cap on how high a stock can go.
Moreover, the article delves into the broader market context. Tesla's market cap, hovering around $800 billion as of mid-2024, reflects not just its automotive prowess but also its ambitions in autonomous driving, energy storage, and even robotics. Bears argue that these ventures are speculative, with timelines often delayed – think Full Self-Driving (FSD) software, which has been "just around the corner" for years. Yet, optimists counter with Tesla's impressive delivery numbers, which topped 1.8 million vehicles in 2023, and its expanding Gigafactory network. The Fool's analysis suggests that while there are valid reasons to be skeptical – such as rising interest rates making EVs less affordable and competition from cheaper Chinese rivals like BYD – directly betting against Tesla via shorts is akin to playing with fire. Margin calls, high borrowing costs (Tesla's short interest often commands premium fees), and the psychological toll of holding a losing position make it a strategy best left to professionals with deep pockets.
Enter CRSH, presented as a smarter way to express a bearish view on Tesla without the stomach-churning risks. CRSH, which stands for "Tesla Crush Inverse ETF" (a fictional but illustrative name in the article, though it draws parallels to real inverse ETFs), is designed to provide inverse exposure to Tesla's stock performance while generating high yields through options strategies. Unlike a straightforward short position, CRSH employs a covered call approach or similar derivatives to produce income, even if the underlying bet doesn't immediately pay off. The article explains that CRSH aims to deliver daily returns that are the inverse of Tesla's, meaning if TSLA drops 1%, CRSH might rise by a similar or leveraged amount, depending on its structure. But the real hook is the yield: the piece claims CRSH offers an annualized yield north of 50%, described as "insane" in the current low-interest environment.
How does this work? The Fool breaks it down step by step. CRSH isn't a plain vanilla inverse ETF like those from ProShares or Direxion that simply mirror the opposite of an index. Instead, it incorporates an options overlay, similar to popular yield-maximizing funds like those from YieldMax or Defiance. For instance, the fund might hold a short position in Tesla futures or swaps while selling call options against them. This generates premium income from the options, which is distributed to shareholders as dividends. In volatile stocks like Tesla, where implied volatility is high, these premiums can be substantial. The article cites hypothetical examples: if Tesla's volatility index (akin to the VIX but for TSLA) spikes during earnings season, the options sold by CRSH could yield double-digit monthly payouts. Over the past year, similar funds targeting high-vol stocks have delivered yields of 30-60%, far outpacing traditional dividends or bond yields.
Of course, no investment is without downsides, and the article is careful to outline CRSH's risks. As an inverse ETF, it's subject to decay from daily rebalancing, especially in sideways or choppy markets – a phenomenon known as volatility drag. This means it's not ideal for long-term holds; it's better suited for tactical trades over weeks or months. Additionally, the high yield comes from options income, which can dry up if Tesla enters a prolonged bull run, eroding the fund's value. Tax implications are another consideration: distributions might be treated as ordinary income rather than qualified dividends, potentially eating into after-tax returns. The piece also warns about liquidity – CRSH, being a niche product, may have wider bid-ask spreads and lower trading volume compared to Tesla shares themselves.
Despite these caveats, the Fool argues that CRSH represents a paradigm shift for retail investors looking to profit from Tesla skepticism. It democratizes access to sophisticated strategies that were once the domain of hedge funds. By combining downside protection (or upside for bears) with income generation, it turns a high-risk bet into something more palatable. The article draws comparisons to other thematic ETFs, like those shorting ARK Innovation (ARKK) or focusing on meme stocks, noting that CRSH has attracted significant inflows since its inception, with assets under management surpassing $500 million.
Looking ahead, the analysis ties into broader market trends for 2025. With potential economic slowdowns, shifts in EV subsidies under new administrations, and Tesla's ambitious Robotaxi rollout, the stock could face more turbulence. Bears might point to overvaluation metrics: Tesla trades at a forward P/E ratio of over 50, compared to the S&P 500's 20. If deliveries miss estimates or if Musk's distractions (like his involvement in X/Twitter) lead to execution missteps, a downturn could materialize. CRSH positions investors to capitalize on this without the nightmare of margin calls.
The piece also includes expert quotes and data to bolster its case. One analyst notes, "Shorting Tesla is like trying to catch a falling knife – thrilling but dangerous. CRSH lets you bet against it while collecting rent along the way." Historical backtests show that similar strategies have outperformed direct shorts during Tesla's volatile periods, such as the 2022 bear market when TSLA fell 65% but shorts still faced squeezes.
In conclusion, the Motley Fool article positions CRSH as a innovative tool for those bearish on Tesla, emphasizing its "insane" yield as a buffer against the stock's unpredictability. It's not a guaranteed win – no investment is – but for investors tired of the emotional rollercoaster of direct shorting, it offers a compelling alternative. As the EV landscape evolves, tools like CRSH could become staples in diversified portfolios, allowing everyday investors to navigate the highs and lows of disruptive companies like Tesla with greater confidence and potential rewards.
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Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/general/2025/07/01/short-tesla-try-crsh-for-insane-yield-instead/ ]
